UPDATE 1-Countrywide CDS out as BofA says no bond guarantee

(Adds analyst comment from fourth paragraph)

NEW YORK, July 21 (Reuters) - The cost to insure the debt of Countrywide Financial Corp's home loan unit rose on Monday after Bank of America Corp's (BAC.N) chief financial officer said the bank doesn't intend to guarantee Countrywide's debt.

Joe Price said on a conference call that "all I can say at this point is we don't intend to guarantee the public debt." He added that he understands the ramifications of not paying at maturity.

Bank of America acquired Countrywide on July 1.

"The statement today should not be surprising," said Ricardo Kleinbaum, analyst at BNP Paribas in New York.

"The market needs to come to terms with the fact that when financial institutions take over other financials, especially in a rescue, the decision to not guarantee does not imply that Bank of America will walk away from the liabilities," Kleinbaum said.

The cost to insure the debt of Countrywide Home Loans rose to 235 basis points, or $235,000 per year for five years to insure $10 million in debt, from 220 basis points, according Phoenix Partners Group.

The swaps had earlier rallied from 258 basis points at Friday's close, according to Markit.

Bank of America's credit default swaps are trading at 112 basis points, according to Phoenix.

"Today's statement was, I think, aimed at limiting damage to Bank of America's investors," as otherwise investors might have believed Bank of America would take on Countrywide's liabilities under any terms, said BNP's Kleinbaum.

In a filing earlier this month Bank of America provided no guarantees on the debt, though analysts said a new organizational structure indicated the bank is likely to repay Countrywide bondholders at maturity. (Reporting by Karen Brettell; Editing by Andrea Ricci)